Mortgage Co. Sued Over Referral Payments From Insurer

Law360, New York (August 2, 2011, 3:42 PM EDT) -- A homeowner hit American Home Mortgage Servicing Inc. with a proposed class action in California on Thursday accusing the company of violating mortgage contracts by receiving payments from an insurer in return for forcing borrowers into unnecessarily expensive policies.

The pre-arranged agreement between American Home Mortgage and QBE Insurance Corp. is unfair and abusive because the mortgage servicer receives undisclosed fees for referring so-called force-placed insurance policies that are unnecessary and costlier than similar policies would be if homeowners purchased them themselves, according to a complaint...